Cognizant Technology Solutions Corp. (CTSH)

Errc02 (< 20) Submitted: 6/23/08 2:24 AM

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What do you mean by 5 yr PEG = 27.33? Can you explain this calculation? And what are you using for a growth rate? Thanks.

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RetireAtFifty (< 20) Submitted: 6/30/08 10:28 PM

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This is really a note to myself, as to one of the reasons I am watching or I bought the stock. Most of my picks are SA or MDP picks, or ETFs . Most of my picks have high caps and Morningstar ratings. But I digress.

To answer your question...I got the 5 yr PEG from Yahoo finance > Analyst Estimate. See http://finance.yahoo.com/q/ae?s=CTSH There are two things I need to mention about this number. 1) it can change every day as a new analyst comes in with a new number, and 2) no one can accurately and consistently predict future returns based on past performance. So why do I use this number? It is a start. I use many numbers. This is one of them. I am a value investor, but I also like Warren Buffet's philosophy to buy stock in a company that I would like to own lock, stock, and barrel, and plan that I could never sell it (invest for the long term).

Also, I found a nifty formula to calculate the Discounted Cash Flow based on the previous years EPS and PEG. It can be found on moneychimp.com or here http://www.moneychimp.com/articles/valuation/dcf.htm This formula is accurate, but is based on previous EPS and PEG, which is an estimate. Also, it does not account for (cash - debt), asset valuation, book value, value of patents or brand, etc.

Note: I do not own any CTSH; it is on my watch list.

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